Just Another Industry Crisis

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Just Another Industry Crisis

By Jonathan Davis, SEMI North America President

I’d like to recommend an interesting book on the semiconductor industry by University of California professor Clair Brown and industry researcher Greg Linden. The book, Chips and Change: How Crisis Reshapes the Semiconductor Industry, presents an authoritative historical overview of the industry from the viewpoint of eight major crises that have reshaped and restructured the industry.

The eight crises include many of the historical forces and trends that we are all familiar with: rising costs of fabrication, challenges to Moore’s Law, workforce development, globalization, etc. The authors use the word “crisis” to describe the business issues and economic trends that have threatened the dominant business model or technical progress. Many of these crises are still unfolding and have not been completely resolved.

Chips and Change: How Crisis Reshapes the Semiconductor Industry

The book examines these crises and the industry’s responses to them to describe how global competitive advantage can be shaped by countries and companies, and should provide a useful contribution to policy makers trying to positively influence the growth and vitality of our critical industry. The book reinforces many of our policy positions in Washington, especially in science funding, workforce and education.

In speaking with Professor Brown, I was especially encouraged by her optimism for the future. The dramatic decline in capital spending over the past year has shaken many of us and generated great uncertainty. She sees the current business environment as just another challenge— like many of the past crises— which the industry will adapt to and overcome. She has high hopes for continued American innovation and confidence in our industry’s ability to change, adapt and thrive.

As her book so clearly makes plain, crises are a natural part of the industry. The text also points out that a variety of strategies can be used in responding to crises and these provide opportunities to establish new competitive advantages. Furthermore, the author points out that supporting institutions in academic, financial and governmental spheres (and a classification in which I would include industry associations such as SEMI) are vital components for the sector's growth. In summary, I found it very useful to think about our current industry inflection in the context of a pattern of transformations that ultimately characterize and shape our business.

Overcoming barriers and finding new ways to create value is what we do best.

October 5, 2009